Oil in Alberta jumps most this year as fires shut output

NEW YORK and CALGARY (Bloomberg) -- Canadian heavy oil in Alberta surged the most since December after wildfires forced a second producer in the region to shut in some operations.

On Thursday, Canadian Natural Resources Ltd. removed all 240 people working at its Pelican Lake and Woodenhouse operations in northern Alberta, halting a combined 65,000 bpd of heavy crude. Cenovus Energy Inc. on Friday shut five wells with minimal production at its Marten Hills site. Western Canadian Select, a regional benchmark, gained $3.50/bbl against U.S. crude futures at 12:02 p.m. New York time, the biggest increase since Dec. 3.

Three years ago, blazes razed entire neighborhoods in the oil-sands town of Fort McMurray and disrupted nearby operations. This year, wildfires in northern Alberta had so far spared production facilities, but Friday morning smoke blanketed the city of Calgary, where most of the industry has its high-rise headquarters.

"We continue to assess the situation to determine when it is safe to restart these wells," Cenovus spokeswoman Sonja Franklin said in an email Monday.

Baytex Energy Corp. and Inter Pipeline Ltd said their operations hadn’t been impacted from the wildfires. A Canadian Natural spokeswoman earlier said the company didn’t have any additional information. Other operators in the region including Gibson Energy Inc didn’t immediately respond to requests for comment.

After eight months of cold, Calgary residents were unable to fully enjoy blue skies and warm temperatures Friday because of a white haze that blanketed the city with a strong smell of burnt wood. The government’s air quality health index for the city fell back to "low to moderate risk" Monday.

While Calgary is no stranger to smoke from Alberta wildfires, the haze more often appears in August, when the season is at its peak.

CTV Edmonton reported Friday that about 14 homes were destroyed and dozens of others are in danger in the Metis settlement of Paddle Prairie, about 965 km (600 mi) north of Calgary. The nearest big fires are about 500 km away from Calgary. The town of High Level has been under an evacuation order since May 20. Evacuations have also been ordered for other areas including Keg River and Wabasca.